We recently compiled a list of the 10 Best UK Stocks to Invest in Now. In this article, we are going to take a look at where Willis Towers Watson Public Limited Company (NASDAQ:WTW) stands against the other best UK stocks.
The OBR (Office for Budget Responsibility) anticipates economic output in Britain to expand by 1.8% in 2026 and by 1.5% in 2027. In September 2024, KPMG reported that The Bank of England might take a more cautious approach when it comes to easing monetary policy as compared to the Fed and the ECB, with gradual cuts resulting in the UK base rate to 3.5% by 2025 end.
Furthermore, the labour market will continue to loosen, with fewer vacancies, and subdued pay growth but a relatively modest rise in the unemployment rate. KPMG went on to add that business investment might see some recovery next year if geopolitical uncertainties ease and the impact of reduced rates and the improving growth outlook offer businesses the confidence to commit to their investment plans.
What to expect from the UK Economy?
As per the new EY ITEM Club Autumn Forecast, the UK economy should grow 0.9% in 2024, down from the 1.1% growth expected in July’s Summer Forecast. The downgrade exhibits that household savings are now lower than expectations, providing less scope for consumers to increase their spending. Furthermore, lower-than-anticipated increases in consumer spending, together with cautious rate cuts to the Bank Rate, demonstrate that UK growth is expected to be steady rather than rapid over the upcoming 2 years.
EY added that business investment is expected to accelerate moderately in the coming years, with rate cuts providing a boost to the private sector. Therefore, the UK business investment should grow to 1.3% in 2024, an increase from the 1% expected earlier. Private sector investment is anticipated to accelerate to 3% in 2025, demonstrating a small downgrade from projections of 3.2% growth in its Summer Forecast.
Inflation Outlook for the UK Economy
EY expects that inflation is expected to average 2.6% in 2024 before falling marginally to 2.5% in 2025 and 2.1% in the following year. The firm believes that this ‘stickiness’ is because of several factors, such as tightness in the broader labour market, and the gradual slowing of pay growth. With spending growth anticipated to be lower than the earlier expectations because of reduced household saving rates, it projects consumer spending to rise by 0.8% in 2024.
EY expects that gradual cuts to the Bank Rate might provide some benefits to the UK’s housing market. It projects house price growth of 1.7% in 2024, and 2.1% in 2025, with declining borrowing costs anticipated to help offset other affordability challenges. Notably, the looser monetary policy is expected to have a modest impact on growth over the short term. Several borrowers on fixed rates will not experience the decline in their mortgage payments and a significant minority might refinance a fixed mortgage to a higher rate, despite a decline in Bank Rate.
Our Methodology
To list the 10 Best UK Stocks to Invest in Now, we used a screener to extract UK stocks. Next, we narrowed our list by selecting the ones having high hedge fund holdings. Finally, the stocks were ranked in an ascending order of their hedge fund sentiments, as of Q2 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Willis Towers Watson Public Limited Company (NASDAQ:WTW)
Number of Hedge Fund Holders: 47
Based out of London, the United Kingdom, Willis Towers Watson Public Limited Company (NASDAQ:WTW) operates as an advisory, broking, and solutions company.
Willis Towers Watson Public Limited Company (NASDAQ:WTW)’s sticky client base should continue to provide it with a competitive edge. The company announced strategic partnerships and divestitures, which include the sale of TRANZACT and investment in Atomos. It remains optimistic about its growth trajectory, which stems from strategic talent investments and specialization. Willis Towers Watson Public Limited Company (NASDAQ:WTW) remains focused on maintaining resilience with the help of strategic adjustments.
In its Q3 2024 earnings call, the company highlighted that current interest rates have been driving demand for pension-derisking strategies. Wall Street remains optimistic about Willis Towers Watson Public Limited Company (NASDAQ:WTW)’s transformation program. The company expects to deliver ~$450 million of cumulative run-rate savings from the transformation program by 2024 end, with total program costs of $1.175 billion. Moving forward, the company’s Risk & Broking business is expected to be aided by strong organic growth and margin improvements.
Since global businesses are facing increasingly complex risks, the demand for sophisticated risk management and insurance brokerage services is anticipated to increase. On October 28, Willis Towers Watson Public Limited Company (NASDAQ:WTW) managed to secure an insurance license to operate as a broker in Saudi Arabia. This strategic step expands its global footprint. Furthermore, on October 29, 2024, it rolled out a new insurance brokerage service in Japan, which aids in strengthening its Corporate Risk & Broking business.
As per analysts, the company’s strategic focus on expanding its services and making entries into new markets should form the base of long-term growth. Roth Mkm upped its price target on the shares of Willis Towers Watson Public Limited Company (NASDAQ:WTW) from $315.00 to $345.00, giving a “Buy” rating on 2nd October.
Overall, WTW ranks 3rd on our list of the 10 Best UK Stocks to Invest in Now. While we acknowledge the potential of WTW as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than WTW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.